Cowen was feeling pretty good about the oil services sector until it surveyed exploration & production firms and found that its original spending estimates were off. Way off. Like a Blaine Gabbert pass.
Agence France-Presse/Getty Images As a result, the knives have come out. Cowen’s analysts downgraded six stocks–Baker Hughes (BHI), Cameron International (CAM), Nabors Industries (NBR), CGG (CGG), Superior Energy Services (SPN) and Helmerich & Payne (HP)–and cut their estimates on even more. Its analysts explain why:
Our Original E&P Spending Survey published today estimated just 4% growth globally in E&P spend in 2014. Given our estimates were based upon an 8% gain in 2014 and a similar increase in 2015, we are lowering our estimates for many of the stocks we cover.
As the market digests a slower growth outlook for 2014, we think consensus earnings estimates will come down. It will be difficult for the oil service and drilling stocks to perform well given this scenario. Thus, we are lowering our opinion on six of the stocks we cover.
Our investment opinion on six stocks is being reduced to Market Perform from Outperform given our reduced industry growth estimates for 2014 and 2015, our lower earnings estimates and valuation.
And wouldn’t you know it–five of the six stocks have fallen today. Superior Energy has dropped 2% to $25 at 2:31 p.m., while Nabors Industries has dropped 2% to $16,62, Baker Hughes has decline 1.5% to $52.58, CGG is off 0.8% at $16.49 and Cameron International has ticked down 0.1% to $58.51. Helmerich & Payne has gained 1.6% to $83.27.
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